Correlation Between TIM Participacoes and Telus Corp

Can any of the company-specific risk be diversified away by investing in both TIM Participacoes and Telus Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TIM Participacoes and Telus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TIM Participacoes SA and Telus Corp, you can compare the effects of market volatilities on TIM Participacoes and Telus Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TIM Participacoes with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIM Participacoes and Telus Corp.

Diversification Opportunities for TIM Participacoes and Telus Corp

0.9

Correlation Coefficient

TIM Participacoes  Telus Corp

Almost no diversification

The 3 months correlation between TIM and Telus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TIM Participacoes SA and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and TIM Participacoes is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TIM Participacoes SA are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of TIM Participacoes i.e., TIM Participacoes and Telus Corp go up and down completely randomly.

Pair Corralation between TIM Participacoes and Telus Corp

Given the investment horizon of 90 days TIM Participacoes SA is expected to under-perform the Telus Corp. In addition to that, TIM Participacoes is 1.76 times more volatile than Telus Corp. It trades about -0.1 of its total potential returns per unit of risk. Telus Corp is currently generating about -0.15 per unit of volatility. If you would invest  1,584  in Telus Corp on October 26, 2024 and sell it today you would lose (169.00) from holding Telus Corp or give up 10.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

TIM Participacoes SA  vs.  Telus Corp

TIM Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIM Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TIM Participacoes and Telus Corp

The main advantage of trading using opposite TIM Participacoes and Telus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIM Participacoes position performs unexpectedly, Telus Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Telus Corp will offset losses from the drop in Telus Corp's long position.

The idea behind TIM Participacoes SA and Telus Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.